A Terrible Purchase: AARP's Endorsement
of Republican Medicare Bill Is No Surpriseby Ted Marmor and Jacob
C. Hackerwww.dissidentvoice.org
November 29,
2003
First Published in Tom Piaine.com

Has
the 37 million-member AARP become the American Association of Republican
Politicians, as it was recently depicted by The New York Times cartoonist
Jeff Danziger? Is its CEO, William Novelli—who once penned a book foreword
for Newt Gingrich—a closet GOP operative? Has the organization been co-opted
by the health insurance industry, on which it relies for a sizable share of
its operating funds?

All these criticisms and
more have followed the AARP’s stunning—but for those who have followed the
organization’s recent evolution, unsurprising—endorsement of the
Republican-crafted Medicare bill even before its details had been made
public. And all of the complaints carry some weight. The AARP has cozied up
to Republicans, which just a few years ago were lambasting the organization
they now laud. And it has long had close ties to health insurers: Indeed,
the organization’s huge membership base was built on the provision of
low-cost supplemental insurance for Medicare beneficiaries.

Yet the true scandal of the
AARP’s stance is not that it is making money off insurance or befriending
the GOP. It is that it is betraying its members’ interests in the name of a
wholly wrong-headed pragmatism. The most striking feature of the AARP’s
embrace of the Medicare “reform” bill is just how unpopular the plan is with
the very constituency the AARP ostensibly represents. In a recent poll, less
than a fifth of older Americans approved of the legislation, and the best
bet is that even fewer will approve of it once its grim effects become
clear.

In short, the AARP is
providing cover for a bill whose underlying realities are starkly at odds
with Medicare’s bedrock principles—and entirely belied by the reassuring
rhetoric of Republican leaders, who insist the bill is designed to bolster
Medicare. This is the Big Lie tactic—saying something repeatedly to make it
seem true. But every knowledgeable analyst knows that the drug benefit in
the bill is weak and convoluted, and that the rest of the monstrosity has
little to do with fixing Medicare and everything to do with crippling it.

The sad truth is that this
Medicare reform legislation is what Republican critics of the New Deal and
the Great Society have lusted after for decades: a major step down a road
that breaks up the risk pool of Medicare beneficiaries and fragments the
common interests that have given Medicare such political stability and
protection. All this means less, not more, generous coverage down the line
and less risk sharing between the healthy and the sick, and between the rich
and the poor.

All of which makes the
AARP’s stance even more puzzling. Why is the AARP supplying political cover
for a bad bill that a majority of their constituents will surely hate? And
why is it working so hard to disguise what is actually going on through the
massive publicity campaign it has already financed?

To answer that question
requires knowing a bit more about the organization. The AARP was originally
a buying cooperative for health and life insurance. (It was also originally
the American Association of Retired Persons; now, it is simply an acronym—a
telling illustration of its new hollowness.) Though founded well before
Medicare’s enactment, it had little to do with the program’s birth. Yet it
gained immensely from the program: In the years after Medicare’s passage, it
signed up (and made) millions by becoming the broker of choice for health
insurance—known as Medigap—that supplemented Medicare’s incomplete policy.
Today, this means that, unlike many consumer organizations, the AARP has
trivial membership dues. It also means that that the AARP has always faced
tensions between its commercial sources of funds and the common interests of
its diverse membership.

In the recent past, the
AARP managed those tensions reasonably well. Yet it also increasingly
reflected the limits of Washington’s inside-the-beltway mentality. In
l987-88, the organization supported Medicare reforms that would have
provided real protection from catastrophic expenses. But it went along with
a financing plan that imposed all the cost of the legislation on the elderly
themselves; then failed to explain its position; and then was startled when
the legislation was revoked within a year.

Still, the Medicare
catastrophic debacle reflected bad political judgment, but decent aims. In
2003, we have the apparent reverse: seemingly shrewd political judgment and
substantively terrible legislation. And therein lies the true source of the
AARP’s stance. Desperate to be politically relevant again in a political
climate hostile to many of the goals that its members hold most dear,
Novelli and the AARP chose to play the inside Washington game rather than do
what most of its members would have regarded as desirable. They presumed
that 2003 was the last chance for any substantial drug benefit for Medicare.
They took for granted the argument that the Democrats will not have
significant margins in Congress in the foreseeable future, let alone enjoy
control of the White House and Congress simultaneously. In Washington, you
have to “deal” if you want to “play.” And that is precisely what Mr. Novelli
and his board decided.

They should not have, for
their own interests and for the interests of the nation. Even judged on the
ill-conceived terms that Novelli and his board set out, the predictions they
made are hardly foolproof. Had this bill failed, the best guess is that
Americans would be debating prescription coverage in the summer of 2004—and
if nothing happened in 2004, in 2005. The AARP of all organizations should
know the power of this issue.

And while the AARP says
that it will work to make the bill better once it is implemented, the
historical record as well as the convoluted structure of the bill itself
suggest this would not be easy. Medicare, after all, was supposed to be a
first step toward national health insurance, but once it passed,
implementing the legislation and controlling its runaway costs consumed
Washington for years. But the current 684-page legislation makes the
original Medicare bill look as simple as a children’s book. With private
insurers and the government scrambling to implement a bill so unworkably
complex, constructive steps forward are unlikely to gain a hearing or enjoy
a secure foundation. If there were an appropriate effluent tax on
legislative messes, our national budget would be back in the black. As it
is, AARP’s members should turn instead to time-tested method of democracy
and throw out leaders who have so dismissed their constituencies’ concerns.
Novelli and his board thought any deal was good. They were wrong. No deal is
far better than the bad one just passed.

Ted
Marmor is Professor of Public Policy at the Yale School of Management
and the author of The Politics of Medicare (Aldine de Gruyter, 2nd.ed.,
2000)

Jacob
S. Hacker is Peter Strauss Family Assistant Professor of Political
Science at Yale and a fellow of the New America Foundation. His most recent
book is The Divided Welfare State (Cambridge University Press, 2002). This
article first appeared in Tom Paine.com.